Russian rouble moves toward highest level in nearly five years

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Russian rouble moves toward highest level in nearly five years

The Russian rouble climbed toward its highest level in nearly five years against the euro, supported by continuing restrictions on currency trading, but fell above 64 per dollar on Monday, briefly jumping to 62.71 to the greenback.

The rouble is the world's best performing this year, though artificial support from capital controls that Russia imposed in late February to shield its financial sector was the reason why it sent tens of thousands of troops into Ukraine.

The domestic currency market is the same for several weeks, and the rouble keeps getting firmer as foreign currency supply exceeds demand, according to Alexander Dzhioev, an analyst at Alfa Capital.

Central bank data showed on Monday that Russia's current account surplus more than tripled from January to April to $95.8 billion, boosted by higher proceeds from imports and a drop in imports.

The point of equilibrium has not been found so far, according to Dzhioev, of the rouble rate.

It was not clear whether President Vladimir Putin had supported the currency because of the demand for gas payments in roubles.

The rouble was 1.5% stronger against the dollar at 63.59 at 1500 GMT, close to its strongest since February 2020 of 62.6250, which it hit on Friday.

The rouble was back to pre-pandemic levels due to the current capital control measures, according to analysts in a note from Rosbank, who said the rouble would fall to 90 to the dollar by the end of the year.

In the near future a new committee on market regulation may change these restrictions, but until then the USD RUB consolidation may stick to the lower bound of the 63.0 -- 70.0 range. The rouble rose by 1.6% to 66.05 against the euro, staying near its highest level since June 2017 of 64.9425, which it touched on the Moscow Exchange on Friday.

Moscow is in focus on Russia's standoff with the West, and fears of a new sanctions package to punish Russia for what it calls a military operation in Ukraine. The requirement that export-focused companies convert foreign currency is a factor in their impact.

The rouble may be moderate, but the dollar rate could gradually decline to 62, according to Promsvyazbank analysts.

The dollar-denominated RTS index IRTS was up 3% to 1,165. 7 points. The Russian MOEX index rose by 2% to 2,354. 1 point.

The MOEX index is expected to enter the 2,400 -- 2,500 range this week, Promsvyazbank said.